Academic journal article Development and Society

Changing Industrial Relations and Labor Market Inequality in Post-Crisis Korea

Academic journal article Development and Society

Changing Industrial Relations and Labor Market Inequality in Post-Crisis Korea

Article excerpt

Introduction

Korea has undergone a series of extraordinary political and economic events over the past half-century. Particularly over the last two decades, the labor market has introduced a large scale of precarious employment, and Korea has ended up with one of the most unequal labor markets in OECD countries. Meanwhile, labor unions of which explosive growth and activism drew world's attention in the late 1980s and the early 1990s have been declining significantly. This paper looks at the changes in industrial relations, including the decline of unions, in association with labor market changes over time.

In particular, it pays attention to the roles that labor unions have played in the process of restructuring the country's post-crisis labor market. While there are numerous studies evidencing that unions as a channel for employee voice play a positive role in reducing labor market inequality (Freeman and Medoff 1984; Kenworthy and Pontusson 2005; Western and Rosenfled 2011), a group of other researchers argues that the union's institutionalized monopoly effect on protecting insiders and their interests contributes to dualism (Rueda 2005; Palier and Thelen 2010; Hassel 2014;). However, previous studies offer us only limited insight to understand the role and the influence of unions in post-crisis Korea, not only because they suggest mixed views, but also because the role of labor unions and its labor market outcomes are affected to a great extent by institutional contexts. In particular, what the above-mentioned studies found was limited to a context where union organization and collective bargaining are structured beyond the firm boundary despite the contemporary waves of decentralization (Bamber, Lansbury and Wailes 2011).

In Korea where firm-level unions are dominant and the bargaining coverage seldom goes beyond the firm territory (Lee 2011; Kwon and Lim 2014), it appears that the society is more likely to form a strong public perception that unions staying comfortably in a wealthy firm boundary have exerted their monopoly power exclusively for their own members, who are likely to be regular employees. Similarly, there are increasing levels of criticism that unions prioritize protection of insiders, and thus contribute to widening a gap between insiders and outsiders (Lee and Frenkel 2004). Such a perception is confirmed by the 2013 Korea General Social Survey where only a handful of respondents (11%) agreed that they trust unions. This shows a dramatic shift from the result of a survey administered in 1989, the peak of the Great Labor Movement, where a vast majority of workers considered unions essential and reliable (Kwon 2015).1 In fact, unions have constantly lost ground over the past two decades. Nonetheless, empirical evidence has not yet been documented to show that there are solid grounds for this strong perception of unions and their role. To offer some background knowledge, I will provide an overview of the current characteristics of industrial and labor relations (ILR) and how the ILR characteristics and their general labor market outcomes have been shaped over time, particularly in post-crisis Korea. Then I will move on to a small set of case studies on the role of unions in one of the affluent industries, banking, during the period of major restructuring in the early 2000. This shall enable us to see if and to what extent unions actually exclude periphery workers and thereby take part in creating labor market segmentation.

An Overview of Structural Characteristics of Industrial Relations and Their Outcomes

Key actors of the national industrial relations system

As mentioned above, the industrial relations structure is extremely decentralized in Korea: both union and bargaining activities take place mainly at the firm or establishment level. In fact, the number of individual unions is nearly 5,300 as of 2013, and most unions run their own collective bargaining unit. As figure 1 demonstrates, the number of unions, after reaching its peak (7,883) between 1987 and 1989, has fallen by more than 3,000 for the following twenty years. …

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